Pricing of synthetic oil

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Alberta
A post from Quora.. Will synthetic oil become cheaper than conventional as more cars start using it? Answered Nov 21 · Philip Angevine, I spent almost 40 years in the refining and petrochemicals R&D arena. Upvoted by Kai Herrmann, Automotive mechanic for 15 years. First, let me give some personal background. related to the topic. I joined Mobil R&D in 1976. At that time they were doing fleet tests for Mobil 1, and the results were awesome. Everyone was excited and amazed about this great advance. I had the great privilege of meeting and working with a talented scientist-inventor, the late Bill Garwood. As such, I got a fairly good understanding of lubricants and their place in the oil industry. Let's talk about financial drivers. For fuels refining, the goal mindset is: (1) economy of scale, (2) keep the plant running (stream factor is great), (3)) throughput is king (squeeze out more barrels per day), (4) avoid risk -- technical, political, and legal. However, in a lubes refining environment, QUALITY is king. The profit opportunity is now measured also by the marketing folks (more upside) "and not just the manufacturing side. Now, for Mobil 1, the profit center is also "chemicals". FYI, at ExxonMobil ("XOM") the name Mobil is retained mostly for the synthetic oil image (rightly so) of high quality. XOM will maintain that image as long as possible. Now for the marketing item: most people think of gasoline as a true commodity-- sort of like a load of bread. They don't equate the value as anything but price and maybe octane. However, XOM (and others) have quantified the importance of additives for engine cleanliness (fuel injectors, intake vales, etc.). This idea is magnified bigtime for lubes. An old colleague of mine once said about synthetics: " This is for guys who pet their cars more than their wives" -- maybe some truth to it. My point is that some folks will recognize the value of synthetics and will pay the higher price -- whatever the market will bear. While there could be downward pressure on price, I'm betting that the consumer will pay the differential. P.S. Think about the shrinking car size (ignoring the sort-lived SUV bubble). There are the two energy costs: the car weight (load) and engine losses (friction). As the load declines, the friction loss becomes more of an issue. This is where synthetics become more beneficial. My assessment is that synthetics will maintain their value in the foreseeable future.
 
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Wet side WA
I think the $19.97 Havoline 6 quart smart box is proof they are. Good oil at a fair price. Now the high priced $50 a Jug oil will still be around for those that really think it gives them something other than a thinner wallet.
 
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WA
He could have condensed it to a couple of sentences but I agree for the most part. One part i do not agree with is likening SUV purchases as a "bubble" per se, at least for the N.A. market. Purchase trends are very much driven by the ease of financing, cost of fuel and maintenance. As long as money/lending is "loose" and crude prices remain low, SUV's and trucks will remain king in this market. No bones about it, we Yank's like our vehicles big.
 
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18,421
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Michigan
Actually, now is as cheap as we are going to see it. There is going to be a major push in the next few years for electric cars/trucks. And the cost of gas and oil are going to rise quite a bit to help push folks in that direction as well.....
 
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Deep in the heart of Jersey
I don't believe the price of gas and oil is going to rise, to push people towards electric vehicles. The oil companies are in no rush to put themselves out of business. Just like the companies that sell home heating oil haven't thrown in the towel, because most homes use natural gas. When the cost of replacing batteries and other high dollar items become a expensive reality, those cheap easy to refuel, cheaper to repair SUV's and trucks will start to look attractive again. The car companies have realized thru low number sales of cars, the buying public wants SUV's and trucks, so they only want to make what will sell.,,
 
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Central Wisconsin
Quote
I don't believe the price of gas and oil is going to rise, to push people towards electric vehicles.
True that. A replacement battery for an electric vehicle costs as much if not more than the value of the used vehicle itself. My 2¢
 
Originally Posted by dwendt44
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I don't believe the price of gas and oil is going to rise, to push people towards electric vehicles.
True that. A replacement battery for an electric vehicle costs as much if not more than the value of the used vehicle itself. My 2¢
Yes and the cost to rebuild an engine and transmission costs as much if not more than the value of the used ICE vehicle itself. smile
 
I think we digressed bit. Thank you Carviewsonic for that post representing an opinion from an accomplished industry expert. I remember talking with a professor from the faculty of engineering from the local university. This was when Mobil 1 was newly on the market. He mentioned they were quite excited about it. I asked him what he thought about it. He said " If you use synthetic oil, and keep your air filter clean, your engine might never wear out" Now admittedly maybe he was a bit optimistic, but I still think in a real world synthetics are worth it at their current prices, especially with sales and rebates. Flame suit on.
 
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1,681
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South Carolina
Oil is cheap. Whether you spend $4/qt or $14/qt. Let's take that for example. 6 quart capacity 7,500 mile OCI 15,000 miles (2 OCI) per year The $14/qt oil would cost an additional $120/yr ($10 per month). Realistically, the higher end oil would go longer intervals than that also. The $4/qt oil would account for 0.12% of my annual budget. At $14/qt, it's 0.41%. By comparison, fuel accounts for 4.54%. (for 1 vehicle) I see no reason to go cheap on oil. That said, I can also see the reasoning against it when you have good UOAs with cheap oils. As for electric vehicles, I don't see that being a complete takeover for quite some time.
 
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309
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USA
Originally Posted by wemay
The march towards EVs is inevitable regardless of oil price. The tipping point long since passed.
I very much doubt that. Electric vehicles are still way more expensive and for many people less flexible and less convenient than gasoline power. (Particularly for the many people who don't have a place at home to charge up.) The market is not demanding electric power, the "march towards EVs" is being forced externally and artificially. Eventually electrics will probably become equal or better in value than conventional vehicles and that will be the "tipping point" - but we are not there yet. I personally would not buy an electric car in their current state of development. I spent several years working at Mobil R&D myself working on software development in the computer department during the 1980s. At the time it was primarily DEC systems in use such as PDP-11, Vax, and the good ol' 36-bit DECSYSTEM-20; stuff relegated to history books and museums now.
 
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The tipping point was reached when just about every manufacturer decided to invest more in EV technology, and some over ICE, moving forward. Many localities also issuing ICE ban dates.
 
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Hawaii, USA
Absolutely correct! The environmental activists were pushing a bill in the Hawaii state legislature and they even passed a bill that died in committee to ban all fossil fuel vehicles and go EV here in Hawaii. These people don't even have a clue that mining lithium for the batteries damages and pollutes the Earth more than fossil fuel production, refining and driving. Our friend had a Nissan Leaf that finally died and to replace the batteries would have cost $8,000. They traded it in for a gasoline burning Toyota Corolla.
 
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CKN

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6,100
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Utah
Originally Posted by anndel
Absolutely correct! The environmental activists were pushing a bill in the Hawaii state legislature and they even passed a bill that died in committee to ban all fossil fuel vehicles and go EV here in Hawaii. These people don't even have a clue that mining lithium for the batteries damages and pollutes the Earth more than fossil fuel production, refining and driving. Our friend had a Nissan Leaf that finally died and to replace the batteries would have cost $8,000. They traded it in for a gasoline burning Toyota Corolla.
Well....on the upside any where on any Island is well within range for an electric vehicle. Last I heard they were still using diesel to generate electricity on some of the islands......however that could of changed.
 
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Wet side WA
Originally Posted by CKN
Originally Posted by anndel
Absolutely correct! The environmental activists were pushing a bill in the Hawaii state legislature and they even passed a bill that died in committee to ban all fossil fuel vehicles and go EV here in Hawaii. These people don't even have a clue that mining lithium for the batteries damages and pollutes the Earth more than fossil fuel production, refining and driving. Our friend had a Nissan Leaf that finally died and to replace the batteries would have cost $8,000. They traded it in for a gasoline burning Toyota Corolla.
Well....on the upside any where on any Island is well within range for an electric vehicle. Last I heard they were still using diesel to generate electricity on some of the islands......however that could of changed.
On Maui they've had 20 plus wind turbines for several years now. In fact last time we were there half of them were idled.
 
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Southern NJ
Originally Posted by RDY4WAR
Oil is cheap. Whether you spend $4/qt or $14/qt. Let's take that for example. 6 quart capacity 7,500 mile OCI 15,000 miles (2 OCI) per year The $14/qt oil would cost an additional $120/yr ($10 per month). Realistically, the higher end oil would go longer intervals than that also. The $4/qt oil would account for 0.12% of my annual budget. At $14/qt, it's 0.41%. By comparison, fuel accounts for 4.54%. (for 1 vehicle) I see no reason to go cheap on oil. That said, I can also see the reasoning against it when you have good UOAs with cheap oils. As for electric vehicles, I don't see that being a complete takeover for quite some time.
Agree 100%. I've never understood the mindset of those that cut corners on oil for their car that costs thousands of dollars.
 
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309
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USA
Originally Posted by wemay
The tipping point was reached when just about every manufacturer decided to invest more in EV technology, and some over ICE, moving forward. Many localities also issuing ICE ban dates.
This must be some strange new usage of the term "tipping point" that we were previously unfamiliar with. Normally, the "tipping point" for a new product replacing an older type is reached when the new is superior to the old one at the same or lower price point. (That's what happened 100 years ago when gasoline cars won out over electrics.) We are not anywhere near that yet with today's electric cars. As far as the "ICE ban dates" that is the artificial forcing of the issue that I was referring to. That is the only reason for most of the spending in EV technology. The market is certainly not demanding it. If ICE bans are tried in the U.S. before electric vehicles are ready for prime time (currently they are not for much of the country and for many people) then the politicians responsible are going to have a problem keeping their jobs. I'm certainly not going to be buying one. What happens in other countries and what other people do is of course their own business.
 
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